| Actual | Previous | |
|---|---|---|
| Index Level | 103.8 | 92.1 |
Highlights
Australia's Westpac-Melbourne Institute index of consumer sentiment spiked sharply higher in November, increasing 12.8 percent to 103.8 from 2.1 in October. This has taken the index to its highest level in seven years, with the number of optimistic respondents outweighing the number of pessimistic respondents for the first time in four years.
This survey was conducted last week, just before and just after the Reserve Bank of Australia left policy rates on hold. Those surveyed after the RBA decision were more confident than those surveyed before, perhaps in response to the RBA's advice that a rate hike had not been considered at that meeting despite stronger-than-expected inflation data.
Respondents to the survey reported improved confidence in the outlook for the domestic economy and their personal finances over the next twelve months and are also more confident about the five-year outlook for the economy. Respondents also indicated a greater willingness to make major purchases.
This survey was conducted last week, just before and just after the Reserve Bank of Australia left policy rates on hold. Those surveyed after the RBA decision were more confident than those surveyed before, perhaps in response to the RBA's advice that a rate hike had not been considered at that meeting despite stronger-than-expected inflation data.
Respondents to the survey reported improved confidence in the outlook for the domestic economy and their personal finances over the next twelve months and are also more confident about the five-year outlook for the economy. Respondents also indicated a greater willingness to make major purchases.
Definition
The Westpac-Melbourne Institute Index of Consumer Sentiment is based on a survey of 1,200 consumers on their assessment of short-term and long-term prospective economic conditions and their own financial circumstances. The survey is conducted early each month, usually just before and just after the Reserve Bank of Australia's monthly policy meeting.
Description
The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is on whether economic growth is too strong and leads to inflation.
Consumer spending is the largest part of economic activity, so markets always closely follow consumer behaviour and sentiment. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.
Consumer spending is the largest part of economic activity, so markets always closely follow consumer behaviour and sentiment. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.
